Rachel Reeves
Main Page: Rachel Reeves (Labour - Leeds West and Pudsey)
Rachel Reeves (Leeds West) (Lab)
The Budget today neither ends austerity nor shows that our economy is on a strong and resilient footing. On page 7 of the OBR document, our growth trajectory is referred to as “unspectacular”. Even by 2023, eight years after the last Chancellor, George Osborne, said that the budget deficit would be eliminated, we still have a budget deficit.
In my short time this afternoon, I will just look at some of the detail on family finances and business taxation and, finally, at Brexit. The £1.7 billion announced for universal credit work allowances by the Chancellor this afternoon is welcome, but it falls short of the £3 billion that is necessary to ensure that no one is worse off under universal credit and it only undoes one half of the cuts made by George Osborne to universal credit just two years ago. It is somewhat ironic that the Chancellor tells us today that he is introducing a scheme to help people struggling with problem debt—although this scheme is worth only £5 million and is for one year only—but it has not occurred to him or the Prime Minister why people are struggling with debt in the first place. They are struggling with debt because of the ongoing austerity, because wages are not keeping up with the rising cost of living, because they are working in the gig economy or on zero-hours contracts, and because they work in the public sector and have not had a pay rise for almost a decade. It is also worth reflecting that 60% of families in poverty today are in work. They are working hard, often in more than one job or in the precarious gig economy. They are working for their poverty and their children’s poverty too.
The Institute for Fiscal Studies forecast that a further 1 million children will fall into poverty in the next five years, taking the number of children in poverty to a record high of over 5 million, including 7,000 children in my constituency of Leeds West. While we are talking of the next generation, today’s announcement of £400 million for schools, although welcome, is less than what the Chancellor announced to fix potholes. Although we all agree that potholes are an issue in all our communities, I think that we would probably all agree that the education and future of our children are more important. The numbers equate to £10,000 for a primary school and £50,000 for a secondary school, which works out as £24 to £48 per child per year—50p or £1 a week, or about 20p a day per child. The Chancellor said it was to pay for those extra little things, but our children, the next generation, were offered very little extra indeed in his speech this afternoon.
I want to say something about business taxation. The experience of families on low and middle incomes jars with what is happening in some parts of our corporate sector and with some of the evidence that we have taken on the Select Committee on Business, Energy and Industrial Strategy, some of it jointly with the Select Committee on Work and Pensions, which my right hon. Friend the Member for Birkenhead (Frank Field) chairs. People are angry, and rightly so when, 10 years after the financial crisis, they see corporate bosses engaging in the sort of malpractice and incompetence that characterised the management of Carillion, BHS and, most recently, Patisserie Valerie. The Chancellor has said today that he is ending PFI and PF2, but when Carillion collapsed the Government had a choice: to take its contracts back in-house or farm them out to other PFI contractors. They chose the latter, embracing PFI rather than bringing those contracts back in-house, which we know will deliver better value for money and better public services.
Meanwhile, we have seen the new head of Royal Mail given a £5.8 million golden hello to take the job of chief executive, while not paying a penny of tax in the UK—another example of botched Tory and Liberal Democrat privatisation. We have also seen the Persimmon CEO take home £35 million last year, while the firm does not even guarantee all its workforce a living wage. The chief executive of Persimmon was one of the few beneficiaries of the Government’s Help to Buy scheme. He has enjoyed a huge bonus on the back of that, while very few people benefited with more affordable homes.
If the Prime Minister had fulfilled her promise to put workers on the boards of our businesses, I am sure that such an outrageous pay packet would not have been awarded, but workers on boards is just another broken promise from this Government. It would now take a worker on the average wage 167 years to earn what a FTSE 100 CEO earns in just one—austerity for some, and largesse and riches for others. Austerity is well and truly over in the boardroom. What a contrast with the lives and experiences of the vast majority of our constituents. At Carillion and elsewhere we have also seen auditors in a cosy cartel, failing to do a decent job while executives make reckless decisions over their companies’ futures and the futures of people who work for them. Government and regulators must do more.
The Chancellor could have used today’s Budget to cancel the further cut in corporation tax from 19% to 17%—which will cost £6 billion and overwhelmingly helps bigger businesses—and instead use the money to support smaller businesses and our struggling high streets, which the Government say are the priority. But today’s announced changes to business rates, while welcome, are worth just a quarter of the additional cut to corporation tax, at £1.5 billion. Again we see the Government’s priority: a tax cut for big businesses while others have to struggle. We see the same with the digital tax. Although it is worth £400 million, page 234 of the OBR’s Blue Book says that the uncertainty associated with achieving that figure is very high. Indeed, the Chancellor has announced only a consultation. Where is the urgency? Where is the action? Frankly, when we consider the profits of those huge companies, £400 million is hardly very much.
Finally, hanging over this Budget is Brexit. Yesterday the Chancellor failed to answer the most basic of questions: will the public finances and our people be better or worse off with a Chequers deal than what we have at the moment? He could not or would not answer, because it is increasingly clear that the Government’s botched negotiations will leave us all worse off. As for a no-deal Brexit, the Chancellor said it would mean having to rip up this Budget and start again. He said in this afternoon’s statement that he is putting money aside if the economy needs additional support, paving the way for a spring Budget and preparing for every eventuality. The Office for Budget Responsibility has revised down net exports next year and says that it is difficult to make any economic forecasts at all because of the huge uncertainty. Nobody voted for this mess. That is why we should now go back to the country with a people’s vote.